E-Commerce Is a Powerful Economic Engine for 21st Century

Gnuschke, John E., Business Perspectives

Almost every era is marked by revolution. Undoubtedly, the 21st century will be known for its information revolution and accompanying electronic economy. But, how sound is this new economy? With current research, more questions are raised than answered. Bureau Director Dr. John Gnuschke ponders these concerns in

Many analysts believe that it is the information revolution that will drive the nation forward in the 21st century. And, e-commerce, in its many forms, is the latest example of the impact of the information revolution on the lives of people throughout the world. A focus on building customer relationships and not transactions or simply profits is creating a new paradigm in business discussions. Economists and business leaders find it difficult to analyze data when creating customers has more value than bottom-line profits. Is the informa-tion revolution and the power of the customer creating a new spirit of entrepreneurship, competition, and change? Are pioneers in the "new" economy replacing "old" economy ideals and performance expectations? Can the "new" economy survive a major business downturn? Will traditional economic tools of monetary and fiscal policy have divergent impacts on the "new and "old" economies? Or, will the "new" economy wither and die under the relentless pressure of competition from the "old" economy and from periodic business cycles or changes in tastes and preferences?

The one thing that is certain is that the absence of official definitions and dedicated performance measures makes forecasts of future e-commerce activity speculative at best. Some of the instability in the technology equity markets reflects the absence of strong data to support the assertions of either true believers or market skeptics. Only good data and time will help us answer many of the questions raised in this article.

Is the Information Revolution Real?

Revolutionary paradigm shifts have occurred rarely in the course of history. The agricultural revolution freed generations of young workers from land-based serfdom and allowed agricultural commodities, especially grain and livestock, to be the basis for expanded trade and commerce. [1] New production techniques, including irrigation, fertilization, and crop rotation, combined with the spread of property rights, privatization, and the enclosure movement to increase production and profits for land owners in the 16th through the 18th centuries. And, the revolution continues as production technologies, genetic innovations, and capital improvements continue to increase the productivity of the land.

Similarly, the industrial revolution had its origin in tumultuous 17th and 18th century Europe and continues to dominate the economic world as we know it. Clearly, the industrial experiences in Britain set the stage for and coincide with the development or market-based economic activity. The development of the factory system, capital equipment, and wage-based labor markets combined with the focus on trade and the evolution of a merchant class to make Britain the world leader in industrial production, trade, and wealth. Since that time, always chaotic but nearly continuous improvements in manufacturing have created and redistributed wealth to those countries and businesses that were most competitive.

But, the lesson to be learned is that significant and sustained change is the mark of an important revolution, and only time will tell if the information revolution is real or virtual. No lasting change in the way the world does business occurred in the past or is likely to occur in the future without realized and unrealized fears, promises, gains, and losses. Winners and losers should be expected as good and bad ideas are sorted out in the global marketplace. And, the list of winners changes continuously as competitive pressures weed out the least efficient producers. Clearly, the information revolution, if it conforms in any way to prior revolutions, will be chaotic, but will result in continuous improvements in the way of life of all the world's residents. …

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